Contura, Alpha to merge, creating largest U.S. met coal producer

Alpha Metallurgical Resources

30/04/2018 19:41

By Tom Hals
    WILMINGTON, Del., April 30 (Reuters) - Contura Energy Inc
 CNTE.PK  and Alpha Natural Resources Holdings Inc  APNR.PK 
said on Monday they agreed to merge, creating the largest U.S.
producer of metallurgical (met) coal, used in steelmaking, and
reuniting the two businesses that were split following a 2015
bankruptcy.
    The deal comes as investors look for consolidation in an
industry that is recovering from a deep downturn in 2015 and
2016, when several coal producers filed for bankruptcy in the
wake of cheap natural gas and stricter regulations.
    Under terms of the all-stock deal, Alpha shareholders will
end up owning 46.5 percent of the merged entity. The two
companies said they sold a combined 12.6 million tons of
metallurgical coal in 2017, vaulting the merged company ahead of
Coronado Resources Ltd  CRDh.V  of Vancouver.
    The merged company will own 1 billion tons of coal reserves,
according to a securities filing.
    The deal gives Alpha and Contura increased scale and
financial muscle, and the merged company expects to list its
common stock on the New York Stock Exchange when the deal
closes, giving it capital for more acquisitions.
    Contura's stock, which currently trades over the counter,
was unchanged at $66.50 per share in afternoon trading, giving
the company a market capitalization of about $685 million,
according to Eikon.
    Alpha's reorganization under Chapter 11 bankruptcy
significantly reduced the company's debt, which had totaled more
than $7 billion when it filed. 
    Contura owned mines in Wyoming that produced more thermal
coal, while Alpha owned mines centered in Appalachia.
    Last year, Contura sold its Wyoming mines and Alpha reduced
its clean-up obligations for idled mines. 
    The merged company will have mines concentrated in West
Virginia and southwest Virginia and a large coal export terminal
on Virginia's coast to serve the global market for met coal.
    The combination will produce cost savings of up to $50
million per year, according to a statement.
    The combined company will be led by Kevin Crutchfield, who
took over as chief executive officer of Alpha in 2009 and took
on that role at Contura after the bankruptcy. Alpha's current
chairman and CEO, David Stetson, will join the board of the
combined company.
    Prices of coal have rallied since the bankruptices of Alpha
and other coal companies such as Peabody Energy Corp  BTU.N  and
Arch Coal Inc  ARCH.K , thanks to strong demand from Asia. For
the first time in years, up to 90 percent of global coal miners
are profitable.  urn:newsml:reuters.com:*:nL8N1S15HZ

 (Reporting by Tom Hals in Wilmington, Delaware; Editing by
David Gregorio)
 ((thomas.hals@thomsonreuters.com; +1 610 544 2712; Reuters
Messaging: thomas.hals.thomsonreuters.com@reuters.net))